1. The Field of the Invention
The present invention relates generally to financial instruments. More specifically, the present invention relates to methods and systems for a financial instrument having both credit (secured and unsecured) and pre-paid characteristics.
2. The Relevant Technology
Financial instruments, and particularly financial cards, are typically divided into two categories. First, prepaid or debit instruments provide an alternative payment method to cash when making purchases. When making a purchase with a prepaid instrument, such as a debit card, the debit card holder is typically required to have a cash balance in an account associated with the debit card that exceeds the purchase amount. A debit card is often referred to as a check card because funds used to make a purchase are typically withdrawn directly from the cardholder's bank account.
Second, credit instruments involve the granting of a loan and the creation of debt. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. Instead, the credit card issuer lends money to the consumer when a purchase is made, and the user is required to repay the borrowed amount plus interest.
Seldom does a single financial instrument combine the characteristics of both credit and pre-paid accounts. One example of a financial instrument having both credit and pre-paid characteristics is a bank account (e.g., a checking account linked to a debit card) that is associated with an overdraft protection account. In an overdraft protection account, an account owner typically maintains a cash balance with a financial institution and purchases are withdrawn from the cash balance. If the account owner makes a purchase or other withdrawal from the account that exceeds the cash balance of the account, the financial institution will automatically fund the remaining portion of the purchase or withdrawal by drawing on a line of credit (i.e., the overdraft account) that is associated with the account owner's primary account. The account owner is then required to repay the amount borrowed from the overdraft protection account.
The subject matter claimed herein is not limited to embodiments that solve any disadvantages or that operate only in environments such as those described above. Rather, this background is only provided to illustrate one exemplary technology area where some embodiments described herein may be practiced.